Pure Storage outlines fiscal 2026 revenue target of $3.6B–$3.63B as company accelerates enterprise and hyperscaler growth
Aug. 27, 2025 10:06 PM ET
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Earnings Call Insights: Pure Storage, Inc. (PSTG) Q2 2026
Management View- CEO Charles H. Giancarlo reported "Pure Storage delivered a strong Q2, expanding our double-digit revenue growth," emphasizing robust enterprise performance and increasing momentum in core software and service offerings, such as Evergreen//One, Cloud Block Store, and Portworx. He highlighted the platform's value proposition, stating, "We deliver simplicity, reliability and long-term value with our integrated Purity operating system."
- Giancarlo described the launch of enhanced Purity with Fusion V2, enabling customers to automate storage and manage data as an integrated cloud, further noting, "Recently, a global leader in IT consulting and digital services is adopting Pure's technology framework to create an Enterprise Data Cloud."
- Notable customer wins included a leading financial institution consolidating applications on FlashArray//XL R5 and a global automotive company expanding Portworx deployment, both aiming to modernize and simplify IT infrastructure. He added, "One of the most interesting large wins this quarter comes from a multinational food products company, moving thousands of its business applications to the cloud," achieving at least 40% cost savings with Cloud Block Store.
- On hyperscale, Giancarlo disclosed, "Our strategic co-engineering with Meta continues on track. They have initiated their first volume deployment, and we have recognized our first revenue from this activity in Q2."
- CFO Tarek A. Robbiati stated, "Revenue of $861 million grew 13% year-over-year and operating profit of $130 million resulted in an operating margin of 15.1%." He attributed broad-based portfolio strength to "large enterprises and the continued momentum of FlashBlade, including FlashBlade//E and accelerating momentum in our core software and services offerings."
- Robbiati noted Storage-as-a-Service TCV sales rose 24% year-over-year to $125 million, and subscription services revenue reached $414.7 million, up 15%, accounting for 48% of total revenue. ARR grew 18% to $1.8 billion, and RPO climbed 22% to $2.8 billion.
- He also introduced the move to guidance ranges, explaining, "This change aligns with many other growth companies in our industry, while also offering us the flexibility to make the necessary incremental investments we need to capture additional growth opportunities."
Outlook- For fiscal year 2026, management anticipates revenue in the range of $3.6 billion to $3.63 billion, representing 14% year-over-year growth at the midpoint. This is a 300 basis point increase from previously provided revenue guidance of 11% year-over-year growth.
- Operating profit is expected to be between $605 million and $625 million, an approximate 10% year-over-year increase at the midpoint, also representing a 300 basis point improvement from prior guidance.
- For Q3, revenue is projected between $950 million and $960 million, about a 15% year-over-year increase at the midpoint, with operating profit in the range of $185 million to $195 million, a 14% year-over-year increase at the midpoint.
Financial Results- Revenue was reported at $861 million, a 13% year-over-year increase.
- Operating profit was $130 million, with an operating margin of 15.1%.
- U.S. revenue reached $577 million, growing 7%, while international revenue was $284 million, up 26%.
- Subscription services revenue was $414.7 million, up 15% year-over-year, and ARR grew to $1.8 billion.
- Total gross margin was 72.1%, with subscription services gross margin at 76.5% and product gross margin rising sequentially to 68%.
- Free cash flow was $150 million, with a margin on revenue of 17.4%. The company returned $42 million to shareholders via buybacks, with $109 million authorization remaining.
Q&A- Amit Jawaharlaz Daryanani, Evercore: Asked about factors enabling "a very sizable acceleration of growth" in the second half. Giancarlo answered that "we're seeing broad-based strength ... and we just -- we have a better sense of the pipeline and therefore, more confidence in the forecast."
- Aaron Christopher Rakers, Wells Fargo: Queried about Meta relationship progression and margin profile. Giancarlo described the revenue as "effectively royalty or software revenue ... at a percentage basis, it's almost practically speaking, 100% margin, 90% plus except for the service element."
- Howard Ma, Guggenheim Securities: Sought clarification on gross margin improvement drivers. Robbiati said, "If you look at our product gross margin improvement of 4 points in the quarter, I'd say it comes from 3 factors. First is revenue mix between product and software. The second factor is product mix as customers go for higher-end solutions; and third is pricing discipline."
- Matthew Ryan Calitri, Needham: Asked about changes in guidance philosophy. Giancarlo stated, "Philosophy doesn't have any bearing on the way we guide ... the idea of introducing a range ... is first to align with the rest of the industry."
- Jason Noah Ader, William Blair: Questioned the Nutanix partnership. Giancarlo noted, "We're oversubscribed in terms of early field trials that are being demanded by customers."
- Hadi M. Orabi, TD Cowen: Asked for updates on hyperscaler engagements. Rob Lee explained, "These early-stage engagements are progressing well ... but I would still describe our status with the next customers as early -- in early stage in those engagements."
Sentiment Analysis- Analysts demonstrated a positive to slightly positive tone, focusing on forward growth, Meta partnership, gross margin expansion, and new strategic partnerships. Questions were framed to clarify acceleration drivers and confirm confidence in outlook.
- Management maintained a confident and upbeat sentiment during prepared remarks, frequently referencing "strong demand signals," "positive momentum overall," and "confidence in our ability to extend our industry leadership." During Q&A, the tone remained steady, with Giancarlo and Robbiati offering detailed, straightforward responses, such as "we seem to be right on time and on target" and "we're confident about our momentum."
- Compared to the previous quarter, both analysts and management were more positive, with less emphasis on macro uncertainty and more on execution and pipeline visibility.
Quarter-over-Quarter Comparison- Guidance shifted from a single number to a range, reflecting increased confidence and flexibility versus the previous quarter's reiterated guidance.
- Management upgraded annual revenue growth guidance from 11% to 14% year-over-year at the midpoint, while the previous quarter saw no change in guidance.
- Analysts' questions moved from concern over macro uncertainty and revenue headwinds to growth acceleration, Meta contributions, and partnership impact.
- Gross margin commentary highlighted sequential improvement, with a detailed breakdown of drivers in the current quarter, as opposed to a more cautious outlook in Q1.
- Strategic priorities evolved to emphasize the Enterprise Data Cloud platform and hyperscaler relationships, compared to a broader focus on product launches and partnerships in Q1.
- There was a notable increase in management's confidence regarding pipeline and large deal momentum, compared to the previous quarter's caution about visibility in the second half.
Risks and Concerns- Management acknowledged ongoing macro variability and uncertainty but indicated "our strong execution and thoughtful planning have kept us ahead of the curve."
- Giancarlo highlighted the challenge of accurately forecasting the mix between as-a-service and product sales, as "one substitutes for the other, but not in recognized revenue, at least not in the quarter."
- Analysts questioned the impact of high-margin Meta revenue and the predictability of further hyperscaler wins, with Rob Lee emphasizing that engagements "are still in early stage."
- No major new risk factors were disclosed, but management stressed the importance of execution and flexibility in investment.
Final Takeaway
Pure Storage delivered strong Q2 results, marked by double-digit revenue growth, robust enterprise and subscription momentum, and the first revenue recognition from its strategic Meta partnership. Management raised fiscal 2026 revenue guidance to $3.6 billion–$3.63 billion and introduced guidance ranges to reflect increased confidence and flexibility. The company highlighted accelerated customer adoption of its Enterprise Data Cloud architecture and continued success with hyperscalers, while maintaining a positive outlook and disciplined execution amid ongoing macro uncertainties.
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